Atchison Casting Corp., the bankrupt foundry holding company, reports it has a definitive agreement to sell what it calls its “remaining operating assets” to KPS Special Situations Fund II L.P. The agreement, which must be cleared by a federal bankruptcy court and pass other hurdles, too, would lead to KPS forming a new company to purchase five foundry operations from Atchison for $40 million.
The other details necessary to completing the purchase are new labor agreements with the United Steelworkers and Glass, Molders, Pottery, Plastics, and Allied Workers unions; an environmental review of the operations; and “other customary legal and business conditions” Atchison announced. Also, while the KPS offer is preferred by Atchison, the bankruptcy court will review other offers.
Both Atchison and KPS expect the transaction to be completed in December.
KPS is an investor group described as “a family of private equity funds focused on constructive investing in restructurings, turnarounds, and other special situations.” It is experienced in manufacturing industries, having brought both Republic Engineered Steels and equipment builder Genesis Worldwide out of bankruptcy.
Atchison Casting declared itself bankrupt in August and filed Chapter 11 claim. In October, it sold its Inverness Castings Group, Dowagiac, MI, to WynnChurch Capital for a reported $8.25 million.
The units to be sold to KPS are:
- Atchison Steel Castings, in Atchison, KS and St. Joseph, MO;
- Amite Foundry, Amite, LA;
- Prospect Foundry, Minneapolis;
- London Precision Machine, London, ON; and
- ACC Global, Houston.
It’s not known what plans are in place for other, idle ACC units, including Canadian Steel Foundries, Montreal; G&C Foundry, Sandusky, OH; and Canada Alloy Castings, Kitchener, ON.
Tom Armstrong, ACC’s CEO, stated: "We are very pleased to have attracted the support of KPS as a likely investor group to bring this company out of bankruptcy. Their experience with the bankruptcy process and expertise in implementing successful turnarounds as well as their capital will be invaluable to the future of the Atchison companies. This should preserve jobs for our employees while providing stability for our customers and suppliers."